The agency said it has upgraded the Philippines' long-term, foreign currency-denominated debt to BBB minus from BB plus and long-term local currency-denominated debt to BBB from BBB minus. The outlooks on both ratings are stable.

President Benigno Aquino III said the upgrade would lower interest on debt and increase investments. He said it was an affirmation of his good governance agenda and economic reform.

"More companies in the real economy can now consider us an investment destination," Aquino said, adding that an investment grade for sovereign debt should lead to lower borrowing costs for Philippine companies in international markets.

Gareth Leather, Asia economist at the economic research company Capital Economics, said the upgrade — and similar expected upgrades by S&P and Moodys — "highlights big improvements the Philippine economy has undergone over the past decade, but the economic benefits are likely to be quite small."

He said government bond yields have fallen to record lows in anticipation of the upgrade and are lower than those of many countries which already have investment grade status. They are not likely to fall much further, he added.

Finance Secretary Cesar Purisima said the Aquino administration remains committed to eliminating corruption, spending on infrastructure and improving the overall business climate.

Fitch credited the Aquino administration's centerpiece reforms, including fiscal management and the recent introduction of higher taxes on alcohol and tobacco to boost revenues.

The Philippines still lags behind Southeast Asian neighbors in foreign direct investment, and foreign chambers of commerce have cited restrictions such as a constitutional ban on foreigners owning more than 40 percent of key industries. Aquino has resisted attempts to amend those provisions.

The Philippines relies heavily on remittances sent by about 10 million overseas workers. The money makes up 10 percent of total economic output and fuels domestic spending but does little to alleviate unemployment at home. About a third of the country's 94 million people live below the poverty line.